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Average American Owes $2,900 in Credit Card Debt

Average American Owes $2,900 in Credit Card Debt

More than half the public uses credit cards for short-term loans

by David W. Moore

GALLUP NEWS SERVICE

PRINCETON, NJ -- A new Gallup Poll shows that just over half of Americans have at least one credit card on which they do not pay off the full amount due each month, thus essentially using it for a short-term loan. Another 29% say they have at least one card, but say they always pay the full amount they owe each month. That leaves about one in five Americans, 21%, who say they don't have any credit cards, including those issued by department stores and banks. The average outstanding balance -- the amount that credit card owners say they will not pay off this month -- is $3,815 among credit card holders, which translates into $2,947 among all Americans (including those who say they have no cards). The average debt as a percentage of household income is 8.0%, though it is in double digits for people earning less than $40,000 a year.

These are some of the findings from Gallup's annual economic and financial survey, conducted April 5-8.

The poll shows that among Americans who have credit cards, the average number they own is 3.6, about the same as what Gallup measured in April 2001 and April 2002.

Whether or not someone has a credit card is highly dependent on income. Half of the people in households with annual incomes of less than $20,000 have no cards, with that percentage declining as income increases.

Percentage of Americans With No Credit Cards
Compared by Household Income
April 5-8, 2004

Not surprisingly, among people who have cards, in general the higher their household income, the higher their credit card debt. There are two exceptions -- people in the $40,000-to-$50,000 range and those in the $100,000-or-more range.

Amount of Credit Card Debt
Compared by Household Income
April 5-8, 2004

Although the absolute amount of the debt increases with income, the debt as a percentage of household income actually declines from double digits to single digits among people earning more than $40,000 a year. The overall percentage among credit card holders is 8.0%, but it is over 10% among people earning less than $40,000 a year, and much smaller among people with higher incomes.

Credit Card Debt as a Percentage of Income
Compared by Household Income
April 5-8, 2004

Worried About Making Minimum Payments on Credit Card Debt

Overall, about 17% of Americans are either very or moderately worried about not being able to make the minimum payments on their credit cards. Another 22% say they are not too worried, and 46% say they are not worried at all.

Worry is clearly related to how much credit card debt people have. The average debt of those with the most worry is more than $8,000, compared with about $4,700 among people who are not too worried, and just $2,400 among people who are not worried at all.

Amount of Credit Card Debt
Compared by Worry About Making Payments
April 5-8, 2004

More telling is that the people who are very or moderately worried have debt that represents more than one-fifth of their yearly incomes.

Credit Card Debt as a Percentage of Income
Compared by Worry About Making Payments
April 5-8, 2004

Typically, the higher the amount owed, the higher the interest rates people are paying to the credit card companies. Thus, for people with credit card debt representing more than one-fifth of their annual incomes, the cost of carrying the debt is quite high. It is understandable why they are worried.

Survey Methods

Results are based on telephone interviews with 1,014 national adults, aged 18 and older, conducted April 5-8, 2004. For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

24. Thinking about all credit cards including department stores, retail chain stores as well as general bank credit cards such as Visa and MasterCard, how many credit cards do you have?



None



1-2



3-4



5-6


7+


No
opin.

Mean
(with zero) †

Median
(with zero) †

Mean
(w/o zero) ‡

Median
(w/o zero) ‡

%

%

%

%

%

%

2004 Apr 5-8

21

33

25

11

8

2

2.9

2

3.6

3

2002 Apr 8-11

17

35

23

12

11

2

3.3

2

4.0

3

2001 Apr 6-8

22

33

23

11

9

2

3.1

2

4.0

3

Mean/median for national adults.

Mean/median for credit card owners

25. How do you generally pay your credit card(s) each month -- [RANDOM ORDER: do you always pay the full amount, do you usually pay the full amount, but not always, do you always pay as much as you can, but usually leave balances, do you usually pay the minimum amount due, but not much more, (or) do you sometimes pay less than the minimum amount due]?

based on --825-- credit card owners


Always
pay full amount


Usually
pay full amount


Usually
leave balance

Usually
pay
min.
amount

Pay less
than
min.
amount



OTHER (vol.)



No
opinion

%

%

%

%

%

%

%

2004 Apr 5-8

37

16

31

12

2

1

1

2002 Apr 8-11

41

14

28

13

2

1

1

2001 Apr 6-8

42

16

29

11

1

1

*

26. Using your best estimate, what is the total amount of money you owe on all of your credit cards, that you do not intend to pay off this month?

 


2004 Apr 5-8

Credit card owners

National
adults

%

%

None/do not own credit card

--

21

None/own credit card

38

29

$500 or less

11

8

$501-$1,000

6

4

$1,001-$2,000

9

7

$2,001-$5,000

12

10

$5,001-$10,000

10

8

More than $10,000

8

6

No opinion

6

7

Mean (including zero)

$3,815

$2,947

Median (including zero)

$500

$0



Next, please tell me how concerned you are right now about each of the following financial matters, based on your current financial situation -- are you very worried, moderately worried, not too worried, or not worried at all. If a particular item does not apply to you, please say so. First, how worried are you about … How about-- [RANDOM ORDER]?

E. Not being able to make the minimum payments on your credit cards

 


Very
wor-
ried

Mod-erately
wor-
ried


Not too
worried

Not
wor-
ried
at all

DOES
NOT
APPLY
(vol.)


No
opin.

%

%

%

%

%

%

2004 Apr 5-8

7

10

22

46

15

*

2003 Apr 7-9

7

9

21

47

16

*

2002 Apr 8-11

7

8

21

48

15

1

2001 Apr 6-8

9

9

22

41

19

*



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Gallup https://news.gallup.com/poll/11377/average-american-owes-2900-credit-card-debt.aspx
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